Universities have faced renewed calls to reverse changes to the Universities Superannuation Scheme (USS), after a monitoring update from the scheme trustee suggested that the retroactive restoration would cost around £0.5bn per year.

The monitoring update, which was provided at the request of the Joint Negotiating Committee (JNC), outlined the estimated cost of increasing the benefits accrued between 1 April 2022 and 31 March 2024.

In particular, it stated that increasing inflation protection in line with the previous levels, which provided full CPI up to 5 per cent and half of CPI above 5 per cent up to 15 per cent, at £0.4bn based on the 30 June 2022 monitoring position.

Increasing the accrual rate back up from 1/85th of salary to 1/75th of salary, meanwhile, was estimated at around £0.5bn based on the 30 June 2022 monitoring position, when a surplus of £1.8bn was recorded.

The University and College Union (UCU) argued that the restoration could therefore be funded by a proportion of the scheme's surplus, noting that this amount is less than the £0.57bn employers and employees are paying each year into the scheme.

Calls for the pension changes to be reversed have grown in light of the scheme's recent funding improvements, with UCU members recently backing calls to strike over the pension changes, as well as pay concerns.

UCU general secretary Jo Grady said: "University vice chancellors forced through brutal cuts to members' pensions earlier this year.

"Six months later the scheme is in such excellent health that the trustee has confirmed lost benefits could be paid back and still leave an overall surplus. This is yet another vindication of our union who said the cuts did not need to happen.

"After our historic ballot result, in which more than eight in ten university staff who voted said 'yes' to strike action, we can now bring every single university that is part of USS to a complete standstill if pension cuts are not revoked and benefits restored.

"The university sector is in good financial health and USS is a strong scheme. All arguments against restoring benefits have now gone up in smoke. If employers want to avoid strike action they must restore benefits."

However, the scheme trustee's report predicted a higher cost based on the annual year-end position in March 2022, with a predicted cost of £1bn to increase inflation protection, and £0.7bn to increase the accrual rate.

In addition to this, a USS spokesperson reiterated that the monitoring reports "should not be seen as an indicator of the likely outcome of an actuarial valuation", explaining that they indicate, at best, the direction of travel, rather than the destination.

They continued: “We have not given any indication of the prospective outcome of the valuation scheduled for March 2023.

“Financial markets have been exceptionally volatile in recent months, which does not provide a solid basis for decision-making. As a result, reliance should not be placed on monitoring figures at any particular date.

“If the trustee’s in-depth and considered assessment under the 2023 valuation finds that the overall contribution rate can be reduced, UCU and UUK’s representatives on the JNC could choose to change the contributions paid by members and employers, enhance benefits – or both.

“We are happy to work to the shared goal of an accelerated timetable, with an ambition to make any changes decided by the JNC by 1 April 2024.

"This would be challenging, but achievable, if all parties can work together constructively – and we are already in discussions with stakeholders to that end, in terms of the commitments that would need to be made in advance.”

Adding to this, a spokesperson for Universities UK, on behalf of USS Employers, stated: “According to the USS trustee’s regular monitoring, the funding position of the scheme has improved which is very good news, but the position is fragile.

“The USS trustee has said that, given the volatility of the financial markets, it does not believe there are grounds to alter contribution levels or benefits ahead of the next full valuation - scheduled for 31 March 2023.

"UUK representatives continue to meet regularly with UCU, both informally and formally, in the hope that by working collaboratively we can accelerate the next valuation, to deliver any improvements to scheme members as soon as possible.”

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